Keeping Financial Institutions in Check

BERWYN, IL, December 13, 2012

After the financial crisis of 2008 and the subsequent financial bailout of 2009, several monitoring and review measures were put into place. The most prominent, the Consumer Financial Protection Bureau (CFPB), supervises the actions of the financial industry. It is the watchdog created from the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and has the authority to determine if bank and non-bank financial institutions are playing by the rules. These steps were needed because many of the industry actions taken prior to the CFPB's formation caused many Americans to file for bankruptcy to escape staggering debt or as an attempt to save their homes.

Who the CFPB Watches

The CFPB has the authority to monitor institutions that fall under the following categories:

- Any non-banks the CFPB believes are conducting transactions which could be a risk to consumers
- Non-banks of any size that offer mortgages or related services to consumers
- Banks with more than $10 billion in assets and all of their affiliate institutions
- Payday lenders
- Private education lenders
- Participants defined by the bureau as having relatively large interests in other markets

The CFPB just conducted their first review of these institutions, and have published the results.

What the CFPB Found

The CFPB's report covers the period of July 21, 2011, through September 30, 2012. There were several problematic areas, including:

- Mortgage issues: There were violations regarding mortgages. For example, lenders were not providing Good Faith Estimates of HUD-1 forms that disclose the types of costs included in the real estate settlement process to borrowers in a timely manner. They also did not provide information about payment schedules, interest rates or payment amounts.

- Credit Bureau Reporting: The CFPB found that not every supervised institution had employees that were adequately trained to comply with fair credit reporting requirements. This, at times, led to inaccurate consumer information being reported to the credit bureaus. This oversight could mean a consumer might pay more for credit than they should have to, and could also lead to having credit requests denied unfairly.

- Credit cards: Some credit-holders under the age of 21 who had co-applicants over 21 were being offered credit limit raises without the consent of the co-applicant. These problems generally occurred with institutions that did not have a process in place to first seek approval from the co-applicant before issuing the credit limit increase.

The CFPB also supervises the reform of compliance laws for financial institutions, and if these guidelines are not in place or enforced, the bureau has the authority to place sanctions against the institutions until they comply. The bureau has issued such sanctions to Capital One, Discover, and American Express, and the fines have generated $435 million in refunds to 5.7 million consumers.

Know Your Rights as a Consumer

The actions of the CFPB have helped to keep some financial institutions in check, but many Americans are still struggling to rebound from the last several years. If you are fighting to keep your home or you're trying to pay off large amounts of credit card debt, consulting with legal counsel about consumer protection law and debt relief options could be the solution to your problems.

The attorneys of Ledford & Wu focus exclusively in the areas of consumer and small business bankruptcy, mortgage and foreclosure, and consumer rights law. With more than 50 years of combined experience, our legal team is highly equipped to protect your interests.

Ledford & Wu
7222 W. Cermak
Berwyn IL 60546
Telephone: 708-566-1063
www.Bankruptcyinberwyn.com